The World Trade Organization Has Estimated That the Developed Nations

question 92

Multiple Choice

The World Trade Organization has estimated that the developed nations of the world can raise global economic welfare by $128 billion by

• A) removing subsidies given to their agricultural producers.
• B) increasing tariff barriers to trade in agriculture.
• C) increasing outsourcing of manufacturing processes.
• D) reducing defense expenditure.

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Definitions:

Forward Contract

A bespoke arrangement between two parties for acquiring or disposing of an asset at a designated price on an upcoming date.

Hedge

An investment made to reduce the risk of adverse price movements in an asset.

Speculative Forward Contract

A financial derivative used to speculate on the future price of an asset, involving an agreement to buy or sell the asset at a future date for a price determined today.

Fair Value Hedge

A risk management technique that uses financial instruments to mitigate the risk associated with changes in the fair value of an asset or liability.